Shrinkflation: It’s a thing, and it’s happening

In the mid-thirteenth century, the Assize of Bread and Ale statute in England regulated the price, quality and mass of bread that was sold within the kingdom. Consequently, bakers would be severely fined if they were caught duping their customers. This a little less harsh than the punishment handed out in ancient times. In Egypt, bakers who were found cheating their customers would have an ear hacked off and nailed to the door; drastic measures indeed.

This is not the case for modern day businesses who are far from inhibited by price controls, especially when it comes to fast-moving consumer goods (FMCG). Current legislation does not specify the minimum mass for most products, the only obstacle being, The Trade Metrology Act, which stipulates that the packaging must be consistent with the content of the product and what is inside the package. For instance, a chocolate bar must not weigh 5% less than what is declared on the package.

Manufacturers and supermarket chains know from past experience that they will be punished by penny-pinching shoppers if prices rise too far or too fast. To address this, several businesses have started reducing the size (mass) of their products as opposed to increasing the price of the goods itself. Producers have a growing tendency to ‘shrink’ products in an environment of rising input costs and to combat consumer resistance to price hikes. This principle actually has a name and is known as ‘shrinkflation’.

Even established supermarkets are looking to beat the discount stores at their own game by keeping a lid on costs and hence their own prices. Shrinkflation enables them to do this. Rather than simply cutting sizes across the board, the smarter operators are shrinking their goods as one part of a temporary solution to the problem.

Shrinkflation to offset production costs

Food and drink pricing always reflects the economic climate of the day, whether that’s the impact of changing utility prices or ingredient costs. Businesses seek to offset these costs wherever possible through improvements in efficiency and productivity, but these actions can only go so far, and in some cases, companies will reduce the pack size rather than increase the price for consumers.

However, it’s the transparency in which these product changes appear to be introduced that leaves questions for many. Producers employ shrewd tactics to ensure that consumers don’t instantly notice the changes to size or mass of a product. It would seem that the shrinkage of products has become an acceptable business practice for companies in South Africa.

Shrinkflation affects everything in the trolley

More and more consumers are starting to notice that many food items are getting smaller, although they are paying the same or more. Everything from dental floss and toilet paper to cool-drinks and chocolate treats is subject to this so-called “shrinkflation”.

The question is, should manufacturers make it clearer to consumers when they shrink their products? Wouldn’t it be easier and certainly more transparent for the pack sizes to remain the same but for the prices to go up?

Consumers have a right to know what’s going on, that they are getting less for their money. It’s a moral and brand image issue and companies are not currently obliged to advertise changes. It is presumed that if prices and sizes of all products are clearly labelled, customers can make informed decisions about their purchases. In reality, is that really happening? Our fast-paced lifestyles’ sees consumers throwing the products in the trolley, without checking the grammage. It takes time before they actually notice.

Angus Kennedy, editor of a trade magazine, Kennedy’s Confection in the UK, says one of the worst examples of shrinkflation was Cadbury’s reducing the number of Creme Eggs in a box from half-a-dozen to five in the run-up to Easter. ‘If these companies said: ‘We’re sorry but we have no choice but to do this because cocoa is now in short supply,’ then I think the British public would be much more understanding,’ he says. ‘What we don’t like is feeling duped when we realise what the companies are up to.’

So, while it is the consumers responsibility to check the pack before they buy, what should producers and manufacturers be doing to communicate the reason for the shrinkage, rather than trying to hide it at the risk of a reputation knock if found out. Pushing up the price and using the input costs is somewhat a more acceptable excuse.

Stratcom branding, the leading packaging strategy and design agency gives thought to the communication of reducing product grammage to the unsuspecting consumer.

Gail Macleod – CEO of Stratcom Branding and Founder member of the GLBA (Global Local Branding Alliance), says, “Be truthful & transparent, however use the opportunity to build brand image.”

Macleod adds, “Use the change in size to communicate new news, such as Ltd. Edition, build a brand heritage story, optimise portfolios and add volumes against sharing occasions as well as smaller packs for individual use, all the while, considering the risks. Upgrade brand image, logo and when possible create a new pack size, that enhances brand distinction and image.”

It seems hiding the new grammage on the pack is no longer working as consumers are aware and more sensitive than ever before. Shrinkflation is a risky move and if you’re trying to convince consumers into paying the same for less and, if they cotton-on to what’s happening, they may hi-jack your brand. Instead, producers could take a more strategic look at the product’s overall cost and find ways to reduce costs and improve efficiency without affecting quality or value.

Much can be achieved by innovation too. Offering a product that offers improved quality or value, consumers may well be willing to pay more for less of it. Alternatively, the adoption of lighter or more compact packaging could reduce distribution costs.

But the trend will no doubt continue, bringing many more downsized products to our shelves, both local and imported. Let’s be honest: transparency is the best policy.

Published in My Office News
27 Mar 2018
Original article here.

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